By Fola James
Russia’s prospect of deploying over $650 billion in its foreign reserve against economic sanctions by global powers appears dimmed following the decision of US and its allies to freeze the dollar denominated funds in the Russia’s Central Bank.
The US alongside her allies had imposed various sanctions after President Vladimir Putin ordered military invasion of Ukraine on Wednesday.
Outrage has greeted the military attack as countries including Nigeria called on Russia to withdraw its troops from Ukraine and stop further aggression.
Nigeria’s Foreign Minister, Geoffrey Onyeama, on Thursday after a with meeting G7 leaders in Abuja, urged the two sides in the arms conflict to allow “peace and diplomacy to be prioritised by both sides”, noting that the federal government will “support every effort being made to stop the aggression and Russian troops to return to Russia”.
The decision by Russia to veto the resolution by members of the United Nation’s Security Council seemed to have further strengthened the resolve by US and her allies to punish the President Putin-led country for invading Ukraine.
The initial sanctions targeted major Russian banks and close friends of President Putin, even though keen analysts have warned that the impact of the sanctions was not likely to be felt by President Putin who have amassed hundreds of billions of dollars in foreign reserves.
Watchers of the event in Ukraine say the military operations had been deliberately planned by President Putin for years, who also stored up dollars earned from Russia’s abundant gas and petrol resources.
Putin’s aggression in Ukraine, however, took a twist on Saturday after US, EU and others said they have considered stepping up measures to punish Russia for its military invasion.
Apart from freezing the $650 billion reserves in RCB, the allies also agreed to restrict Russia’s access to the globally acclaimed SWIFT, an electronic platform that connects major financial institutions across the world.
According to Wikipedia, SWIFT linked more than 11,000 financial institutions in over 200 countries and territories, while on average, over 32 million messages are exchanged daily on the platform.
“We commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada, and the United States, said in a joint statement.
The allies further stated that “s Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies.
They also detailed additional economic penalties that the nations would collectively impose, including restrictions intended to prevent the Russian Central Bank from deploying its international reserves in an effort to escape the sanctions.
Meanwhile, in response, SWIFT domiciled and established under Belgian law in a statement said it will do everything to comply on the new economic measures against Russia banks.
“We are engaging with European authorities to understand the details of the entities that will be subject to the new measures and we are preparing to comply upon legal instruction,” the company said.
